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Solar PV: What it is, and why it is here to stay

27 October 2016

  • Renewable energy

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If you’re considering installing solar panels, then there are three key things we’d like you to know:

  • They generate electricity without contributing to global warming
  • Once installed, they produce free electricity
  • You can still get paid through the Smart Export Guarantee for electricity you generate, to help pay back the cost of installation

All of the above is a great incentive to invest in solar, especially with the upcoming price rises in wholesale electricity on the horizon.

However, many of you are naturally curious to know a little bit more about what solar photovoltaics are, what new technology is on the horizon, and what the future holds for solar in light of changes to government funding and incentives.

We went along to listen to Chris Jardine of Oxford’s Environmental Change Institute when he came to speak to Guildford Environment Forum on 28th June, 2016, and below we’ve written up a summary of his talk to help answer some of these questions.

An introduction to the technology

Photovoltaics are made from semiconductors, most commonly silicon, which absorb the energy in sunlight to generate electrical current. Silicon is the second most abundant element in the Earth’s crust meaning that even in its construction, PV is sustainable. It has become such an important technology because it uses a resource potentially much larger than any other renewable form of energy, releases no harmful gases during its operating life time, has a long lifetime (25+ years) and is largely maintenance free. The decentralised nature of the supply also offers greater energy security and avoids reliance on fuel imports and tariffs. What’s more, a typical system in the UK will repay all the carbon generated in its life cycle (production, maintenance, decommissioning etc) within 3 years of operation.

There are three main types of PV on the market at the moment. These are mono-crystalline silicon, multi-crystalline silicon and amorphous silicon.

Mono-crystalline is made from a single crystal grown from a melt, then sawn into wafers. It is the most efficient of the three, converting 16% of the solar energy hitting the cell into solar power. Multi-crystalline is cast from a melt and sawn into wafers in a similar manner to mono-crystalline, but it doesn’t have rounded edges meaning increased productivity due to a greater surface area for each cell. It is usually 15% efficient, but the extra surface area means its power production is roughly equal to mono-crystalline, as is the price.

The other established type is amorphous silicon. It has a much lower efficiency of 6-8% but is cheaper and easier to mass produce onto a range of substrates including plastics and glass. It can also be non-rigid so has a wider range of applications. However, it has been less popular because most of the costs are usually from getting the panels onto the roof, rather than from purchasing the product itself. Therefore, financial gain in choosing inferior quality panels is usually marginal at best.

But what about the future of the technology? There are alternative semiconductors to amorphous silicon such as cadmium or indium which are more efficient, but they have their problems. Cadmium is highly toxic and would have to be disposed of carefully at the end of its life, while indium is in limited supply resulting in an ironically unsustainable renewable energy source. There is greater optimism around higher spec technology such as Sunpower all back contact panels (20% efficient), or HIT solar cells (18% efficient), although these are yet to become established fully in the market.

There has also been substantial progress in the types of mountings available. Building-integrated Photovoltaics (BIPV) such as solar tiles offer the opportunity to build PV into the fabric of buildings. BIPVs offset the cost of the convention material that would have been used instead while performing many of their key functions such as waterproofing, insulation and soundproofing. While this is great for new builds, these technologies are harder to retrofit and have seen fewer uptakes than more established roof mounted panels thus far.

Solar in the home

In the UK, a domestic household will typically install a 2kWp system. This can usually produce around 1720 kWh/yr, or roughly half the average household electricity use. However, the amount that panels produce can be affected by location and conditions, with panels in the south and east of the UK producing slightly more per kWp compared with the north and west.

Most household systems are designed to interact with the grid. This allows for the use of PV power in the home alongside grid electricity, while unused power can be exported to the grid as well. Because PV modules generate DC electricity, an inverter is needed to convert this into alternating current (AC), matching it to the grid. This interaction means that the system will be cut off if the grid goes down: Sadly, it is a myth that solar will keep you running in a power cut. However, it is possible to convert to an off-grid system through some battery solutions such as Tesla, although this is still a very new technology to the marketplace.

Fields of Solar = Fields of gold?

The other popular method of solar deployment is large scale ground mounted solar fields. These are normally connected directly to the grid to provide wholesale power -. Ground mounted systems are usually far easier to implement than building mounted systems. This is because buildings often involve lots of stakeholders and issues around decision making, while solar field installations are usually purely finance led, easier to install and with fewer conflicting interests to manage. There are concerns that solar fields have an impact on biodiversity, although in some situations biodiversity has been seen to actually increase due to greater shelter offered under the panels, and the cessation of intensive farming practices.

Doing it for the money

The environmental reasons for investing in solar are obvious to all, but financial savings driven by a free energy supply (after installation costs) have also been a major factor. On top of this, the government has offered the Smart Export Guarantee (SEG) which pays out for the generation of renewable electricity.
There are four main business models used to justify investment in solar:

  1. Straight purchase – the homeowner or business buys the system, pays the costs and reaps the benefits.
  2. 3rd Party finance (rent-a-roof schemes) – An investor purchases the system, takes FiTS payments, and the host building benefits from free electricity.
  3. Social housing – Similar to 3rd party finance, but with local council as the investor. 
  4. Community funded – Capital raised by share issues with FiTS repayments split between host buildings, shareholder repayments and community benefit projects.

Obviously, if you’ve got the capital, straight purchase is the most lucrative option in the long run. Rent-a-roof and social housing schemes have made some of the benefits of solar more accessible to lower income householders, although drops to the feed-in-tariff have made them much less common in 2016. Community projects have also been common, but again they have become less viable since the changes in subsidies occurring since the last general election.

Subsidies, opportunities and mistakes

During its short history, subsidies have been key to getting Solar PV into the energy market worldwide. Because the main costs involved in solar are all incurred during installation, essentially we are paying for all our energy in one go for the next 25+ years. So, while the overall cost is very low compared to fossil fuel generation, the time required to pay back the initial investment can be long. This means subsidies are needed to make solar a viable and attractive option.
However, costs have plummeted in the past few years largely due to the rise of the Chinese markets, improved manufacturing and a more skilled and efficient network of installers. Therefore, it makes sense that subsidies can gradually be removed as the cost moves closer to and inevitably below the rising cost of traditional electricity generation (as has already been seen, for example in Spain’s subsidy free solar farms).

In the UK it is estimated solar is around 5 years from achieving cost parity with retail electricity. Unfortunately, in March 2019 the UK government decided to initiate an ‘energy policy reset’, replacing the Feed in Tarrif with the Smart Export Guarantee. This has caused around 18,000 jobs to be lost in the industry (more than 50%) with major companies such as Mark Group and Climate eEnergy both folding under pressure. The fear is that this premature cut in subsidy has stalled the industry moments before it could truly cross over to the mass market and become cost effective in its own right.

While these cuts have been very damaging, the economics of solar are unstoppable. At some stage in the next few years costs will fall below fossil fuel electricity generation as fossil fuel prices rise. At this point solar will be the most viable energy generation technology available and capacity will increase accordingly. However, policy support is still required to prepare the industry to take maximum advantage of this opportunity, and this is sadly not the case in the UK currently. If the industry is not supported then this country will fall behind, locking itself into high cost and environmentally damaging fossil fuel tariffs while the rest of the world reaps the benefits of cheap, clean, sustainable energy from the sun.